Perspectives differ on gas tax proposals

Published April 18, 2013 at 4:49 pm

by T.W. Budig

ECM Capitol reporter

Transportation advocates, many wearing highway yellow “Transportation Means Jobs” pins, rallied at the State Capitol on Wednesday (April 17) ahead of the start of the final month of the 2013 legislative session.
Hennepin County Commissioner Linda Higgins, at the podium, gestures during a transportation rally at the State Capitol. (Photo by T.W. Budig)

From a podium surrounded by highway signs, speakers urged the modest-sized crowd to fight for transportation funding.

House Capital Investment Committee Chairwoman Alice Hausman, DFL-St. Paul, said the House transportation finance bill needed “a little push.” But it might to time to start shoving.

Democratic Gov. Mark Dayton has repeatedly stated that he does not favor a gas tax increase. And some, including the governor, question whether the public has bought into increased transportation funding.

Rep. Jim Abeler, R-Anoka, one of the “Override Six” who teamed with Democrats to overturn Republican former Gov. Tim Pawlenty’s transportation finance bill veto, senses no desire in his district for transportation tax increases.

“In 2007-08, there was public demand and interest — at least public interest and understanding — and there was a sense of value. And I reflected my district when I did my (override) vote,” Abeler said. “But not voting for it (transportation tax increases) today, I am also reflecting public value and interest and my district as well.”

Democrats, who control the Legislature, can pass beefed-up transportation bills alone.

Proposals have revved and sputtered. A different funding twist is now being proposed.

The Senate Transportation and Public Safety Committee on Wednesday (April 17) advanced a bill promising about $700 million in additional transportation dollars during the upcoming biennium, $1 billion the next. It take a different approach to the gas tax.

Committee Chairman Scott Dibble, DFL-Minneapolis, is proposing a 5.5 percent tax on the sale of fuels by wholesale fuel retailers. Rather than increasing the state’s current 28.5 cent gas tax, the bill proposes to roll back the gas tax by 6 cents.

But the proposal drew fire. Minnesota Petroleum Marketers Association Executive Director Kevin Thoma in the transportation committee argued that wholesalers could not possibly absorb the additional cost of the tax.

“You would have to pass it along (to consumers),” Thoma said.

Thoma spoke of wholesale profit margins of just 12 cents a gallon, and the potential for pass-along costs as high as 18 cents a gallon.

But Dibble said the affect consumers would feel at the pump is unknown.

“It is entirely their (wholesalers) choice to pass it or not,” he said.

Minnesota Transportation Alliance Executive Director Margaret Donahoe said the wholesale fuel tax is not a new idea. A different direction needs to be taken with the gas tax, she said.

Gas tax revenues are currently projected to decline by about $80 million during the next four years, she said. The tax is losing its punch, she explained.

House Transportation Finance Committee Chairman Frank Hornstein, DFL-Minneapolis, said on Thursday, April 18, he hadn’t yet studied the Senate proposal closely, but the legislative process is working.

“The Senate will do their thing; we’ll do our thing,” he said.

Dayton, like Hornstein, said he hadn’t the chance to scrutinize the Senate bill. But the governor again spoke against raising the gas tax.

“I’ve made my position clear,” Dayton said. “An increase in the cost of fuels, I think, is against the best interests of middle-class Minnesotans,” he said.

It doesn’t get the state to where it needs to go, Dayton said.

“We need something that’s comprehensive, statewide, that we can show Minnesotans that in a decade, we’re going to make a real difference in their driving experiences,” Dayton said. “And no one has developed that vision yet. That vision has to go first. Ways to finance it come second.”

The governor, in his proposed state budget, proposed a quarter-cent, metrowide sales tax increase to fund transit.

The Senate transportation legislation contains a variety of revenue raisers. In addition to the wholesale fuel tax, it contains a county wheelage tax option and a seven-county, three-quarter cent transportation sales tax provision. It also contains a 0.375 percent increase on the vehicle excess tax, a change estimated to capture an additional $71 million during the upcoming biennium.

House transportation finance provisions don’t include a gas tax increase. County wheelage tax options, and county sales tax options have been proposed.

His administration, Dayton said, would be developing a transportation proposal over the summer and autumn, seeking public comment.

“And see if there’s public support,” Dayton said.

There’s still time left to craft a meaningful transportation finance bill this session, Hornstein said.